Online platforms: Commission sets out its approach to platforms

Online platforms have been squarely within the sights of the Commission since the start of the Digital Single Market (DSM) initiative. What is the Commission doing about them?

On 25 May 2016, the European Commission published its communication on online platforms which:

1. outlines the key issues identified in its assessment of online platforms; and
2. sets out its approach to online platforms in the future.

Unlike most of the other documents published by the Commission on 25 May 2016, the communication does not contain any concrete proposals.

Encouragingly the Commission has stated it will only introduce regulatory measures which address clearly identified problems relating to a specific type of activity of online platforms, as opposed to pre-emptive rules which could stifle innovation.

Platforms are already heavily regulated by existing laws (for example, data protection and consumer laws), but because they occupy different sectors, they don’t have a single “platforms regulator” or a single body of law that could be described as “platform regulation”. This absence seemed to lead the Commission to believe that platforms are “unregulated”, which is not the case. Its platforms assessment seemed to be an attempt to bring platforms into line. Reassuringly, the communication steps away from this notion. The Commission recognises that there are multiple areas of overlap with other DSM initiatives, but that many areas of concern are covered by different areas of law and other initiatives. Notwithstanding that, there are still some areas that the Commission will, in due course, address.

What is a platform?

The Commission has removed its previous, all encompassing, definition of platforms, but has not yet provided an alternative.

Instead, the Communication identifies specific characteristics that are shared by online platforms, including:

• the use of information and communication technologies to facilitate interactions (including commercial transactions) between users;
• collection and use of data about these interactions; and
• network effects which make the use of the platforms with most users most valuable to other users.

Examples given include: eBay, Amazon Marketplace, Google and Bing Search, Facebook and YouTube, Google Play and App Store, Facebook Messenger, Google’s AdSense, Zalando marketplace, and BlaBla Car and Uber. This time, the likes of Netflix and CanalPlus have (rightly) been omitted, with the focus very much on “multi-sided markets”.

Will the Commission regulate platforms?

No, not specifically. The Communication will not propose a new general law on platforms, nor will it change the liability regime in the E-Commerce Directive. However, it is committed to adopting a policy and regulatory approach that responds directly to clearly identified challenges, and which are flexible and future proof.

Platforms are already covered by a plethora of laws – from data protection to consumer law to competition law. The Commission recognises that the existing legal regime is for the most part sufficient to regulate platforms, although the legal framework is not neatly encapsulated under a single regulator.

What does the Commission propose to do?

The Commission will be guided by the following principles in its approach to dealing with platforms:

• create a level-playing field for comparable digital services (this is linked to the review of EU telecoms legislation, and the e-Privacy Directive which are expected by the end of the 2016):
  • this may lead to simplification, modernisation and lightening of existing regulation; and
  • as a general principle, comparable digital services should be subject to the same or similar rules, duly considering opportunities for reducing the scope and extent of existing regulation. For example, when it comes to OTT communications services, the Commission is considering deregulation, together with specific rules for all relevant and comparable services.
• ensure platforms act responsibly (this is linked to the copyright reform package and the revised audiovisual media services framework):
  • the Audio Visual Media Services Directive (AVMSD) will deal with issues relating to video sharing platform services;
  • it looks likely that there will be sector specific regulation in the area of copyright, to ensure that the value generated by new forms of online content distribution is fairly shared between rightsholders and distributors;
  • the Commission will address the issue of fair remuneration for creators in their relations with other parties using their content;
  • the Commission will evaluate the role intermediaries play in the protection of intellectual property rights, and will consider amending the legal framework for enforcement;
  • the Commission will engage with platforms to set up voluntary mechanisms for dealing with copyright infringement, using a “follow the money approach”, targeting those benefitting from infringement;
  • the Commission will assess the liability regime of online intermediaries established by the e-Commerce Directive, including: (i) the need for guidance on the liability of online platforms when putting in place voluntary measures to fight illegal content online; and (ii) the need for formal notice-and-action procedures; and
  • the Commission will further encourage coordinated EU-wide self-regulatory efforts by online platforms in tackling illegal content online; the Commission is currently in discussion on a code of conduct designed to combat hate speech online.
• ensure transparency and fairness for maintaining user trust and safeguarding innovation:
  • the Commission will further promote interoperability actions, including through issuing principles and guidance on secure electronic identifications (eID) interoperability at the latest by 2017;
  • the Commission is pushing for greater transparency for users in how information is presented to them;
  • the Commission also wants improved transparency (and enforcement of transparency) in general (for example as regards sponsored search engine results); and
  • the Commission will encourage industry to step up voluntary efforts, which it will help in framing, to prevent trust-diminishing practices (including tackling fake or misleading online reviews) and monitor the implementation of the self-regulatory principles agreed on comparison websites and apps.
• safeguard a fair business environment: the Commission is concerned about unfair terms and business practices used by platforms in their dealings with other companies, and will launch an investigation into this.
• ensure open and non-discriminatory markets in a data-driven economy: the Commission wants to enable users (both private and business) to switch platforms more easily, and is considering options for effective approaches.

What now?

It is very much a case of watch this space.

The Commission has identified a number of areas which it needs to consider over the coming months. Its aim is to adopt policy and regulatory approaches that respond directly to the challenges, and which are flexible and future proof. The Commission has pledged to (amongst other things):

• obtain more evidence on the prevalence of “unfair” trading practices;
• launch a targeted fact-finding exercise concerning business-to-business practices in the online platforms environment, to determine if further action to address fairness in business-to-business relations is necessary. By spring 2017 the Commission will determine if additional EU action is necessary;
• in 2016, encourage coordinated EU-wide self-regulatory efforts by online platforms;
• further promote interoperability actions, including through issuing principles and guidance on secure electronic identifications (eID) interoperability at the latest by 2017; and
• assess the need for guidance on the liability of online platforms when putting in place voluntary measures to fight illegal content online, starting in the second half of 2016.